KEY POINTS:
There are good reasons to retain the Serious Fraud Office. One of the most obvious was mentioned last week by the Finance Minister, Michael Cullen, when he noted New Zealand was facing the most complex and challenging economic forces for 20 years. The fall-out from this will demand a dedicated fraud-detection agency. The Government, however, has pressed ahead with legislation to abolish the SFO and merge its functions with a police unit to deal with organised crime. Only by a fortuitous twist of fate has that process now been put on hold, thanks to the SFO's decision to investigate a complaint over donations meant for New Zealand First. Hopefully, that lifeline will soon become a life preserver.
It is highly unlikely the SFO will complete its investigation before Parliament rises. Assessing the complaint made by Act leader Rodney Hide before announcing an inquiry did, after all, take it a month. Indeed, it is in the agency's own best interests to prolong the probe, given the National Party opposes its abolition. Short-term survival implies the strong possibility, given the outcome of recent polls, of a long life.
To suggest, however, as Progressives leader Jim Anderton has, that this inquiry was initiated by the SFO to serve its own purposes is ludicrous. Even greater depths of shamefulness were plumbed by the Prime Minister yesterday when she claimed it was "almost certain" the SFO tipped off National about its intention to investigate NZ First. The two extraordinary accusations suggest nothing less than a wilful and self-serving Government campaign to undermine the credibility of one of its own law-enforcement agencies.
This is the more unfortunate given the importance of the agency's survival, no matter how oddly it might be arrived at. Ahead of the SFO lies an extremely busy period. This seems not yet to have dawned on the Government, which, in its rush to discard the agency, has forgotten its genesis. This lay in the debris of the 1987 sharemarket crash. Twenty-one years later, as Dr Cullen has pointed out, strong headwinds are again at work. On this occasion, finance companies have shown the greatest fragility, much to the cost of many elderly investors.
Harsh times inevitably bring to light practices that tend to remain concealed when things are going well. Already, the SFO is investigating the Blue Chip property companies that went into liquidation this year owing $80 million to 2000 investors, and Bridgecorp, a finance company that owes about $500 million to 18,000 depositors. History suggests other probes will follow. This mocks the Government's claim that substantial white-collar crime is no longer part of the landscape, and that it is safe to dispense with the agency.
There is little chance that alleged rorts by finance-company executives would be tackled adequately by the police's Organised and Financial Crime Agency, which, according to the Government plans, would absorb the SFO. The Police Minister, Annette King, has admitted the agency's focus would "very much" be gangs, as part of a strategy of getting tough on organised crime. The type of investigation typically undertaken by the SFO would not be a priority, and would also be seen as far more onerous than tackling gang activity. Fraud is the the most difficult of crimes to detect and prove its intent beyond reasonable doubt.
In only a few months, events have proved the error of the Government's ways. It should acknowledge this by granting the Serious Fraud Office more than just a stay of execution. The fate of a specialist fraud unit should not rest on the outcome of the general election. Indeed, at this very time, its muscle should be being strengthened.
